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Rural start-up market: What they should learn from grown start-ups

A few weeks ago, the founder of Flipkart suggested the government find ways to curb foreign rivals. Meanwhile, Jeff Bezos, whose firm he aped, met Donald Trump and pitched he was “super excited about the possibilities this could be an innovation administration”.

The difference in the public stance of the two entrepreneurs signals Indian firms shouldn’t fear deep pocketed rivals, but their own lack of imagination. In the 20 years since Amazon came into being as seller of books, it’s changed the shape of retailing globally and also re-imagined its business model every step of the way.

The firm — which is a technology company with a deep logistics network — is not longer just a seller of clothes, gadgets, groceries and furniture. It is the seller of convenience — to individuals and to businesses.

Amazon delivers goods to customers in under an hour in some countries. It’s experimenting with Amazon Go, a kind of basic grocery store where customers won’t have to deal with a cashier. A raft of technologies, from a smartphone to cameras, will ensure the customer can walk out with goods for which he will be billed automatically.

Meanwhile, Amazon Web Services (AWS), a cloud platform, is slaying it: making mainframe storage obsolete. And technology giants ranging from Microsoft to the omnipresent Google are lagging.

In just five years, Amazon has grown its cloud business from $750 million to an estimated $12 billion this year. In the AWS giant software marketplace, anyone hosting on cloud can buy other software they need and strap it on to the Amazon bill.

That’s the same as telling a shopper he can buy the rug for the living room, and the floor cleaner at the same time. By doing all these things, centred around convenience, Amazon has demonstrated that while it’s a huge company, it behaves like a nimble startup. It’s truly obsessed with how to serve the customer using technology, rather than being focused on competition.

Contrast that with Flipkart’s Founder Sachin Bansal, who is sweating over rivalry when he should be thinking innovation. In the decade Flipkart’s been around, its talked-of customer-centric innovation has been cash-on-delivery. That now risks being strangled in the push for digital payments in India.

Bansal, instead, is collecting acolytes for a kind of Bombay Club — a throwback to the early 1990s when India’s family-run firms lobbied against opening the economy to international ones. That plan was flawed then, as it is now.

Bansal’s emissary seems to be Bhavish Aggarwal, another copycat who founded Ola, modelled on cabhailing service Uber. Aggarwal insists the market is distorted by capital, not innovation. Sure, deep pockets do help, but despite vast troves of money, Uber was browbeaten by smaller rival Didi in China.

Uber is looking beyond, though. It has just set up an artificial intelligence lab, delivers food, is experimenting with driverless cars and shipment delivery. In the shared Uber world, there will be way fewer vehicles, more shared Uber rides. Uber’s emphasis on getting rid of personal vehicles is giving established automakers sleepless nights.

Ola, though, is still very much the ridehailing service. Bansal and Aggarwal, the two poster boys of Indian startups, must know they have spent too much time driving up valuation, and too little reimagining what their business could become. Preventing larger rivals access to the Indian markets will only help make the local firms more pricey, not more innovative.

It doesn’t serve the consumer, but it does serve the promoters. What India needs is startups that make the most of the vast pool of technology talent on offer, to bring convenience to underserved Indians.

In the years they have been around, neither Flipkart nor Ola found ways to truly disrupt the rural marketplace — India’s most parched market — and arguably that offering the most potential. Rural markets lack last-mile connectivity and have poor access to goods and services. A startup that’s able to find a way to plug these gaps has the potential to be as respected as Amazon and as valuable as Uber.

In missing that market and creating a poor also-ran to Amazon and Uber, Indian firms risk writing their own obituary. They shouldn’t expect too many tears at the funeral.

(The writer Anjana Menon is founder, Content Pixies)

Source: Economic Times